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Be careful trying to apply technical reasoning to movements in a commodity that are fundamentally driven.
Same thing in CL as KC. I think CL has another leg down because the fundamentals are still extremely bearish. While new drilling is down (rig count), production is still increasing and setting new recent highs every week. The oil well owners hedged their oil with futures or options at prices far higher than futures are now so there is no reason for them to shut down wells.
CL crashed $15 in May in 2010, 2011 & 2012. We might see that again this year.
A lot of traders have become long at CL at current prices. It will get ugly if we have a $15 drop further this year.
I sold May /KC 230 calls about 2 weeks ago (49 DTE). Already about 50% profit and thinking of either closing them off or holding them till expiration havent decided yet.
I almost ended up making a similar trade but did't for a few reasons.
1. My broker actually convinced me not to. She told me that agriculture, especially coffee, tends to "grind down but fall up" due to things like the weather. She also noted that based on my position size, 3 contracts, the fact that I'm selling so far out, and exchange fees on the ICE are higher I'd make very little.
2. I ran out of money . I'm adhering to Ron's margin reserve rules and with my GC and CL positions I'm on the sidelines until I close out one or both or they expire.
3. I'll investigate coffee after/if the market finds a bottom and my other positions free up. For now though, I'm learning one of the most critical skills of this whole game, patience. Lots of patience.
- Carley Garner. She's been helping me quite a lot, far more than I really could ask her to given how new I am to the process. She also gave me the lowest fee/rates she can so that helped as well. My only real issue is that the Zaner platform GAIN uses sucks compared to ThinkorSwim. I wish I could mix/match on that.
. I'm adhering to Ron's margin reserve rules and with my GC and CL positions I'm on the sidelines until I close out one or both or they expire.